# B.08.Gillam & Snader

 2 categories of experience rating no split plan: losses are not dividedsplit plans: divided into primary & XS. Primary reflects frequency (most weight); XS represents severity 2 categories of split plan single split: only one split into primary & excessmultisplit: div into increments. Decr portion of each incr is  primary Basic formula for no split plan M = [ZA + (1-Z)E] / E = 1 + Z [(A - E) / E], Z = E / (E + KE)0 ≤ Z ≤ 1, d/dE(Z) ≥ 0, d/dE(Z/E) < 0if KE = k, M = (A + K) / (E + K) Split plans (+) better reflect diff types of WC clms (small, med, large w indemn)M = (1 / E) [ZpAp + (1-Zp)Ep + ZeAe + (1-Ze)Ee]M = 1 + Zp [(Ap - Ep) / E] + Ze [(Ae - Ee) / E]Zp = E / (E + KE), Ze = E / (E + JE)M = 1 + [(Ap - Ep)/(E + KE)] + [(Ae - Ee)/(E + JE)] Perryman's Formula goal: come up w a formula for M which does not include credibility constantsM = [Ap + WAe + (1-W)Ee + (1-W)K] / [E + (1-W)K] Credibility from revised experience rating plan primary cr is greater for smaller risksexcess cr is slightly greater for smaller risksprimary cr is smaller for larger risks (capped at 91%) → no more self-ratingXS cred much smaller for larger risk (cap 57%) Primary value formulae I = Increment or interval width1940: Ap = Σ I(1-d)i + (1-d)N(A-NI); max(Ap) = I * (1/d)1961: Ap = [A / (A + C)] (I + C)1991: Ap capped at \$5K AuthorExam8 ID166025 Card SetB.08.Gillam & Snader DescriptionFundamentals of Individual Risk Rating, Part I Updated2012-08-14T19:44:49Z Show Answers